Our study examined using an AI-backed self-guided learning method for teaching engineering ethics. The main goal was to improve students’ ethical understanding, critical thinking, and moral reasoning abilities. There is a growing need for student-centered and interactive pedagogies, so AI platforms can help students generate questions of varying complexity and receive instant feedback to transform the learning environment into a dynamic and personalized experience by incorporating gamification, self-paced, and AI-helped peer engagement to explore awareness of ethical considerations and foster academic excellence. We seek to inspire students to deepen their grasp of professional ethics and, in turn, motivate them to try for improved performance. Besides, we adopted creating quiz-style challenges, presenting practical ethical cases, and offering interactive, AI-powered activities. These tools encouraged students to employ several ethical principles, work together, and share their understandings with their classmates. To encourage students to think critically about ethics and work together, the approach designed activities like quiz-based challenges, realistic ethical dilemmas, and interactive exercises developed with the help of AI, prompting students to apply many ethical frameworks and share their understandings through collaborative discussions by using different online tools that helped students better memorize information and understand their professional duties. Student performance was compared over two semesters to see if this teaching method was effective, checking how well they met the course learning outcomes. The results showed significant improvements in students understanding, ability to analyze problems, and motivation to tackle difficult moral questions. These findings highlight how AI-supported self-directed learning can truly change how engineering ethics is taught. It offers a powerful way to help future engineers develop crucial decision-making skills and prepare them to handle ethical challenges with confidence and strong moral principles.